Step 3: Determining Ultimate Value Though quantitative tools provide evaluation/pricing starting point, they must be used in conjunction with careful evaluation of qualitative factors to ultimately determine fair market value. Those factors are instructive as to a fair split of excess benefits between the negotiating parties. As well, and the actual budget constrained, [...]
Qualitative Factors in IP Valuation Step 2: Applying Approaches Assuming the availability of adequate data, income approaches often provide the most useful measure of value. Of particular significance is incremental income approach, which compares the intellectual asset covered returns with the returns the next best alternative. Products or services containing unique intellectual [...]
Given this background of the three general methods of valuation, the process of valuation of intellectual assets thus proceeds in several steps: Step One: Choose An Approach Optimally, an intellectual asset valuation, just like valuation performed when selling a home, should employ each of the three approaches noted above. Data and information [...]
Cost approaches are utilized under the premise that a prudent licensee would pay no more for the intellectual property at issue than the cost to obtain, either by purchaser by construction, an exact replica of the subject technology or an alternative that achieves the same function. Two types cost methodologies predominate: Reproduction cost [...]
Market approaches examine the terms of comparable technology transfers to arrive at a fair transfer price and terms for the intellectual asset under consideration. Arm’s-length transactions between nonaffiliated entities best cover the technology under evaluation. A host of related transactions within a limited price range provide strong evidence of what the market will [...]
Income approaches appraise the intellectual asset based on the value of the excess revenues or reduced costs that arise from use of the subject technology. Such approaches assign a price based on the level of extra or incremental benefit generated by the anticipated higher volumes, higher prices, or lower costs. Income approaches take [...]
Intellectual assets in its various forms (such as patents, copyrights, trademarks, trade secrets, and know-how) can contribute greatly to a company’s bottom line. In many business circumstances, it is essential to explicitly identify and record the value of such assets. Such circumstances arise in the context of a transaction such as sale/purchase, license/cross [...]
Variations exist in the IP Law of the Major Jurisdictions. Some examples are: Variations in United States Exhausting patent rights - Agreements that only release liability for past sales, but did not retroactively authorize such sales, did not exhaust patent rights, and does not protect downstream resellers from being sued for infringement. Terminating [...]
Of course cost is one of the most fundamental considerations in making foreign filing decisions. Failure to accurately evaluate this cost leads to two different errors: (1) underestimating the cost and committing to a strategy that is too expensive for the company to sustain, and (2) overestimating the cost and foregoing valuable protection. [...]
Variations In The Law And Practice Of Intellectual Property Law Across A Variety Of Jurisdictions Although the practice of intellectual property is generally constant around the globe there are important differences between specific countries. An excellent guide highlighting those differences and commonalities was put together by Gordon Harris of Gowling WLG and published [...]
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